Teaching sequence

Work through this resource material in the following sequence:

15 minutes

Tune in: Who is responsible for our retirement? Challenging prior knowledge.

15 minutes

Find out: What is super, actually? Explicit teaching.

25 minutes

Take action: Where should I invest my super? Independent investigation.

Tune in: Who is responsible for our retirement?

Step 1. Discuss:

What do you already understand about superannuation?
Should you be forced to save for your retirement? This is a complex question. At this age, students would probably prefer more money in their pocket, rather than having to contribute to a superannuation fund.

Explain to students that if no one had a self-funded retirement (ie: drew upon their accumulated savings in their superannuation to pay for their living costs in old age) then the government probably would not be able to fund the massive pension required for all of these people, a pension which is already quite a small amount compared to the cost of living.

However, what if someone wants to buy a house in the middle of their life? Would the money invested in superannuation be better spent looking after someone in the present, by saving them on rent and larger interest repayments, rather than being 'saved' for the future.
What if students were given a once in a lifetime opportunity to study abroad, but their parents couldn't afford it? Would they be content knowing there is money sitting in their parents' retirment funds, waiting until they reached a certain age?

What if someone wanted to continue working well past the age they could access their superannuation?

All of these are questions that challenge the logic of an enforced superannuation contribution.
Is superannuation the best way to save for retirement? It might interest students to know that the Superannuation Guarantee (SG) was only introduced in 1992. This act made it mandatory for exployers to contribute 3 per cent of an employee's wage towards a superannuation fund. What if, instead, employees could bury some of their wage in a treasure chest in the backyard? It's worth reminding students that they would then not be able to benefit from compound interest.

Find out: What is super, actually? Explicit teaching.

Step 1. Watch:

If students aren't familiar with how investments (shares) generate money, it could be worth studying our Stockmarket Factsheet as a class.

Step 2. Discuss:

Do we trust these 'experts' working for our superannuation fund to make the best choices for us? What could be the benefits of this system? What could be the downside of this system?

Step 3.

Read the article from The Conversation: "Rio Tinto just blasted away an ancient Aboriginal site. Here’s why that was allowed".

Step 4. Discuss:

How would you feel knowing you gave Rio Tinto your money to destroy an ancient Aboriginal site by investing in them through your superannuation fund?

What is more important to you: supporting social and environmental issues, or making money? This is an interesting point to debate. From the article mentioned below:

In September, the head of Hostplus said divesting from coal was “a waste of time” - because those shares would just be bought by other people. Instead, he advocated putting direct pressure on governments.

Xavier O’Halloran from Choice says that if your fund eats into your returns (either through high fees or just bad performance), you might be better off donating or investing that money direct to the cause. “We found with some of these ethical funds the fees are pretty high compared to the market average,” he says. “You’ve really got to weigh up the returns you are getting compared to the fees.”

It’s easy to underestimate how much fees chip away at super. It’s the magic of compounding. An apparently negligible 0.8 percentage point difference in fees can add up to $123,000 less in super over a lifetime.

“On a purely mathematical analysis you might be better off going with a more traditional fund,” O’Halloran says. “Then you can make a contribution more directly.”

But O’Connor from the RIAA disagrees, pointing to the effectiveness of divestment from tobacco. “We have seen 35 super funds divest from tobacco in the past five years. And that has probably divested about $2bn from the industry. That is a massive, loud signal.”

Take action: Where should I invest my super? Independent investigation.

Step 1.

Students imagine they are about to start their career, and are looking for a fund to manage their super.

Students should find a fund that matches their ethics, but that also provides a healthy return in order to fund their retirements.

The Student Worksheet provides resources and questions to guide students through this investigation, although students should also conduct their own research.

What super fund would you recommend?
Why did you choose this fund? What morals did you connect with?
What is this fund's average returns?
Would you be willing to compromise on some of your ideals to get a better return from your superfund? Why or why not?
How do you justify potentially receiving lower returns by contributing to an ethical superfund?

Reflection

Students imagine they are speaking to their parents.

How would you advise them to invest their super?
What points would be most persuasive for getting them to change their minds on their current super?
What barriers to change might they encounter?

Encourage students to have this discussion with their parents later tonight.

Real Wealth - Ethical Superannuation

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